The Hong Kong dollar is trading around 7.81 against the US dollar today. On Wednesday, the rate reached its highest level since 2007 hitting almost 7.83, triggering worries that the authority may abandon the linked exchange rate system in force since 1983.
Under the current framework, the Hong Kong dollar is allowed to swing between 7.75 to 7.85 against the US dollar. If it is close to the upper limit, the authority will sell its reserve of US dollars and buy in Hong Kong dollars to keep the rate within the band. Ceajer Chan, secretary for Financial Services and the Treasury Bureau, said the fundamentals of the Hong Kong economy are solid, adding the financial sector is able to cope with the capital outflows.